Search form

Deloitte’s sixth M&A trends report reviews insights from 1,000 executives at corporations and private equity firms about deal activity in the current year and their expectations for the next 12 months.

Given current uncertainties facing dealmakers, the somewhat surprising results point to sustained, strong deal activity, with 76% of M&A executives at US-headquartered corporations and 87% of M&A leaders at domestic private equity firms expecting an increase in the number of deals that their organizations will close over the next year.

Also, seven in ten respondents expect that the size of those transactions will be larger than the ones brokered in 2018.

Among other top findings: as opposed to technology acquisitions, corporate respondents are most focused on expanding their customer bases in existing geographic markets or expanding and diversifying their products and services; about 40% of respondents say that half their deals within the past two years failed to generate their expected value or return on investment; and industry and sector convergence continues to be a major theme in M&A transactions.

The respondents also shared that M&A remains the No. 1 intended use of increased cash held by corporations, in part due to tax reform, and there is an unexpected surge of interest in China.

The report next details survey responses to each of the major trends identified, including with respect to the volume and size of expected deals, divestitures, potential deal obstacles, trade and tariff issues, rising interest rates and tax reform.

The report further explores the shift in strategic drivers from technology acquisition to expansion of geographic markets or products and services; criteria for deal success, with effective integration ranked as the single most important factor; external and internal factors felt to explain why M&A transactions do not generate expected value; and banking and securities as the most likely sectors to experience convergence.

Moreover, the authors note that Canada and China were the two top foreign markets listed for M&A deals at a time when the US was engaged in tough trade negotiations with these countries.

In conclusion, the authors note that the number of corporate and private equity respondents that anticipate the current level of M&A activity to continue or even grow in 2019 is quite large—almost 90%.

Russell Thomson is a National Managing Partner at Deloitte. He currently leads the US Merger & Acquisition Services practice. which provides services across the entire M&A deal lifecycle, from pre-deal strategy advisement through post-merger integration execution.

Deloitte LLP refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity.